The economic losses in Germany due to the pandemic and the war in Ukraine

This article updates an estimate of the overall economic production losses as a result of the pandemic and geopolitical upheavals. It is not possible to separate and attribute the impact of these two events, as they have overlapped since 2022. In this estimate, a counterfactual economic development is compared with the actual economic development. In this hypothetical reality, it is assumed that the pandemic and the war in Ukraine with their diverse geoeconomic adjustment burdens do not exist. The total loss of price-adjusted gross domestic product over this five-year period amounts to 735 billion euros. The two direct pandemic years 2020 and 2021 account for 290 billion euros. Due to the de facto recession on the one hand and the assumed counterfactual increase in the course of the pandemic on the other hand, the economic losses rose to 145 billion euros in 2023 and significantly to 200 billion euros in 2024. The total losses in private consumption over the last five years are likely to be a good 470 billion euros. This corresponds to 5 per cent of actual consumption in this period and a loss of consumption per capita of around 5,600 euros in total over the five years. In terms of gross fixed capital formation, the losses over the past 20 quarters are estimated at a total of 265 billion euros. This corresponds to 7 per cent of total gross fixed capital formation during this period. While consumer losses were significantly higher than investment losses at the peak of the pandemic, the balance of losses in recent years has been increasingly characterised by lost investments. The economic losses caused by the pandemic, the war in Ukraine and the geopolitical upheavals now exceed the losses incurred in Germany during the crises of the last quarter of a century. In the structural crisis from 2001 to 2004, they amounted to 3.4 per cent of the actual gross domestic product of the corresponding five-year period. During the financial market crisis, the economic costs were significantly higher at 4.1 per cent. In the 20 quarters to date since the outbreak of the coronavirus pandemic, the accumulated losses already amount to 4.3 per cent of actual economic output over these five years. The increasing investment losses in particular will have a lasting impact on economic development and the ability to overcome the major challenges posed by digitalisation, transformation, demographics and geopolitics.